Is now the time to renounce your U.S. citizenship?
Renouncing my U.S. citizenship is not what I have in mind, but lots of expatriates are considering it. Why?
Because the U.S. is one of only two countries in the world that taxes its citizens on citizenship, rather than residency. Eritrea is the other country to have adopted this policy. I bet you never even heard of it. That’s because it’s a tiny nation of about five million inhabitants in the Horn of Africa. So, take out these two nations of grossly different proportions and what you’re left with is the rest of the world that thinks that all citizens should be taxed based on their earnings in their country of residence. Period.
The reality of this policy is that if you hold U.S. citizenship, no matter where you actually live, no matter where you earn your money, no matter how you got that citizenship, you are obligated to file a tax return with the IRS annually. This doesn’t mean you pay tax to the U.S., because there are tax treaties in place, but the chances are double taxation can and does occur. Plus, the hassle of filing a tax return to the IRS may be an obligation that costs you time and money for no benefit to you or the U.S. This is particularly unfair to “Accidental Americans” — those who accidentally acquired their citizenship because one or both of their parents are American, are one-time green card holders or are married to a U.S. citizen.
And guess what else? We expatriates and accidental Americans have taxation, but no representation in government. No one is looking out for our interests…no senator, no representative, no governor. (Remember the Boston Tea Party from 1773 when the “colonists objected to the Tea Act because they believed that it violated their rights as Englishmen to “no taxation without representation,” that is, to be taxed only by their own elected representatives and not by a British parliament in which they were not represented.” Source: Wikipedia.org)
It sucks, right? Personally, as an American living and working in France, even my French company’s income is now taxed for the sole reason that I, as a shareholder, hold a U.S. passport. The IRS calls it Section 965 Transition Tax. Maybe the IRS has dollars signs in their eyes thinking about such U.S. (now quite international) companies like Apple, Microsoft, Amazon, etc., but little guys like me are bearing the burden, too. Sorry, the IRS doesn’t deserve a penny of it, but what choice do I have?
Renouncing your U.S. citizenship can provide a way out, but this isn’t a decision to take lightly. In order to accomplish this, you must appear in person before a U.S. consular or diplomatic officer and sign an oath of renunciation. When you renounce, you renounce all the rights and privileges associated with such citizenship. You would be giving up your right to live in the U.S. If you don’t already have citizenship in another country, you could end up with no nationality at all. That means you wouldn’t have the ability to own or rent property, work, marry, receive medical or other benefits, even attending school can be affected.
And travel? Forget it. No passport, no entry into other countries, even the U.S. if the U.S. suspects that your renunciation is for tax avoidance purposes. You’re going to love this additional side effect: renunciation does not remove your obligation to serve in the military or avoid possible prosecution for crimes or escape the repayment of financial obligations. Finally, you can’t go back. Once you’re renounced, you’ve renounced. You’re never going back. So, you see. This is serious stuff.
All this is why there is a big movement to change the policy. What can you do? Plenty. First off, you can join any number of organizations that are spearheading the movement:
AARO, Association of Americans Resident Overseas
American Citizens Abroad
American Expat Finance
And a host of others… These organizations will inform you and provide ways of participating in reaching the legislators who can make a difference.
To learn more in a very personal way, Moodys Gartner Tax Lawyers (Calgary, Toronto, Edmonton, Buffalo) is offering a free seminar on the main topics of interest concerning the renunciation of your US citizenship. This is your chance, if living in Paris, to Learn how your decision to (or not to) renounce your U.S. citizenship will impact you and your family today and in the future.
Presented by Alexander Marino, the free seminar covers the following topics of interest:
* Why do people renounce US citizenship and how do I know if renouncing is right for me?
* What are the pros and cons of renouncing — do the benefits of citizenship outweigh the costs?
* What happens if I haven’t filed US tax returns and am identified as a US person by my bank?
* Can renouncing help with the negative consequences of US tax reform legislation?
* Am I or a family member an “Accidental American”?
* I once had a US green card — do I still need to file with the IRS?
* How do I ensure I renounce the right way and avoid pitfalls like the US exit tax or becoming barred from visiting the United States?
* What will be my relationship with the United States after renouncing?
Saturday, November 23, 2019
10:00 a.m.-12:30 p.m.
The Peninsula Hotel, Paris
I’m already registered. Are you?
A la prochaine…
Adrian Leeds Group
P.S. There are very few time slots left to have a one-on-one consultation with me if you are in the Los Angeles area in December. I’ll be spending some time in Santa Monica over the Christmas holidays and will be available the mornings from 10 a.m. to 12 p.m. in Santa Monica (if possible) December 20th and 21st, 23rd, 24th, 26th and 27th. Our two-hour session will cost the same as the normal fee, except in dollars, rather than euros, saving you 10%. To book your consultation and learn more, email me now
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